How NOT to trade

Here's a post I just read from a bearish blog site

it broke.1050spx tired of this bearish crap. im LONG from here to 1050. gl

This was a post from a bearish trader who for weeks was short and now threw in the towel and is even going long! He's doing this at a time when the market is extremely ST overbought and at major resistance. You see, in the end so many of these bears that cite fundamentals, p/e ratios and other "logic" to back up their bearish positions end up covering at the worst of times because they can't take the pain and by covering they just add to the "insanity" that they complain about!


I think the market has been very resiliant today because of Apple's earnings slated earnings release tommorow morning. It looks like a lot of burnt bears like the above trader have had enough and can't bear the thought of the market gapping and running tommorow morning like what happened after Intel reported and so they are packing it in.

This is the sort of capitulation that occurs near tops. Obviously this is only 1 trader but I've been seeing similar capituation elsewhere. When enough of these guys are out of the market then you can expect to see at least a ST top, if not an IT top.